Rockwell Automation (NYSE: ROK) reported adjusted earnings of $1.57 a share in its fiscal fourth quarter, down 16% from the same period a year ago and well below consensus estimates of $1.78. Sales were equally weak, dropping about 10% to just over $1.6 billion, also missing consensus, which was for nearly $1.7 billion. That's bad news, but the worse news is that it doesn't sound like things are going to get better in fiscal 2016.

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Rockwell had a tough fiscal 2015. Source: Rockwell Automation.

A tough quarter all around
Rockwell Automation joined ABB Ltd. and Eaton Corp. in commenting that the oil industry was a big problem. Eaton, for example, had forewarned that the 6% or so of its business from that industry would be a drag on earnings in the second half of the calendar year -- and it was, to the tune of a 25% decline in the segment in the calendar third quarter.

ABB CEO Ulrich Spiesshofer, meanwhile, noted during his company's earnings conference call that "we believe that more postponements of new capex in upstream oil and gas are to come." The company posted a 2% decline on the top line and a 3% decline in new orders.

So it isn't a surprise to see that Rockwell is warning that oil and gas hasn't stabilized yet and will continue to be a headwind, though the headwinds extend beyond just that segment, with slower demand across other heavy industry markets and emerging markets. That's the backdrop for full-year fiscal 2016 guidance of between $5.90 and $6.40 a share for adjusted earnings.

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Next year doesn't look great, either. Source: Rockwell Automation.

Alone, that bit of information isn't so bad, until you look at fiscal 2015's adjusted earnings, which came in at $6.40 a share. That was up roughly 4% year over year, but below consensus of around $6.60 a share. Revenues were basically in line with expectations but down around 5% versus the prior fiscal year, hampered largely by currency headwinds. The real takeaway, however, is that Rockwell is saying that the best-case scenario it sees right now for fiscal 2016 is flat earnings. So don't expect much good reading from Rockwell over the next few quarters.

Any good news?
That said, there's some good news hidden under the headlines. Most notably, Rockwell reported record free cash flow and increased its dividend by 12%. Basically, even though the industrial automation specialist didn't earn as much as expected, it was still quite profitable. And the moves it's making to keep costs in check and adjust to the changing global environment are having a positive impact. That may not be showing up in earnings, but it is visible where it counts -- cash flow.

Although it's hard to see the silver lining here right now, the types of products Rockwell sells make businesses more efficient and help to reduce costs by connecting them to computers. In other words, while demand might soften, it's highly unlikely that it will go away, since the Internet of things is a big-picture trend. And Rockwell is financially solid enough to withstand the current storm. For contrarian investors looking for an Internet of Things play, Rockwell is a stock that should be on your watch list now that it's fallen over 15% from recent highs.

Reuben Brewer has a position in Eaton Corp. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.